Under typical circumstances, Fridays without major economic data releases are usually marked by subdued market movements. However, last Friday saw gold prices experience the largest single-day decline since the current rally began. Does this signify the start of a collapse in gold prices, or is it merely a false retreat by the bulls? To answer this question, one must analyze the underlying news event that triggered this decline.
Over the weekend, reports emerged that since Donald Trump’s presidency began, the Russia-Ukraine conflict has entered its third year, with signs of potential negotiations on the horizon. U.S. officials are set to meet with Russian representatives in Saudi Arabia to discuss ending the conflict.
Details surrounding the talks remain limited, except for the fact that the negotiations will involve only the U.S. and Russia—neither Ukraine nor the European Union, which borders Ukraine, will be participating. This makes the talks both significant and less formal, introducing a layer of uncertainty to their outcomes.
However, the very fact that talks are taking place suggests a shift in the long-term trajectory of this conflict. For gold prices, which have been buoyed by the "war premium," this development could exert downward pressure. Furthermore, with gold prices hovering near the 3000-point mark, even if the market experiences temporary highs driven by turbulence from the talks, investors must remain aware of this significant bearish factor for the future.
Monitoring Gold Price Trends: Key Technical Indicators
Given the inherent uncertainties in the news, it’s crucial to focus on the technical characteristics of gold prices to make informed decisions. In the short term, gold prices have closely followed the 10-day moving average throughout the current rally. After Friday’s decline, prices have fallen precisely to the level of the 10-day moving average. If gold continues to decline next week and breaks below this average, the ongoing bullish momentum may enter a consolidation phase, prompting short-term positions to exit the market.
For medium- to long-term trends, the 20-week moving average serves as a better benchmark. Currently, this moving average is located near the 2700 level. As long as prices remain above this level, the overall bullish trend persists.
After a period of consolidation, it’s still possible for gold prices to reach new highs. At that point, investors should assess whether the 2700-point level provides strong enough support before considering re-entering long positions.
Impact of Russia-Ukraine Talks on Crude Oil Prices
In light of the upcoming critical negotiations related to the Russia-Ukraine conflict, crude oil emerges as another key asset to watch. Direct negotiations between the U.S. and Russia on this issue are likely to involve discussions not only on political matters but also on the allocation and management of resources. Issues such as a potential embargo on Russian oil exports could also come under discussion. This has the potential to significantly impact oil prices, which have been managed through production cuts in recent years.
The situation bears some resemblance to the collapse of the production-cut alliance in 2020. If the conflict ends, Russia will likely prioritize economic recovery, which could lead to an increase in oil exports—a strategy aimed at generating revenue. Simultaneously, the U.S. would welcome lower oil prices as a means to combat inflation, enabling Trump to further advance his ambitious tariff policies. It's worth noting that oil prices have remained stagnant since Trump took office, and this is something that should not be underestimated. Should prices fall below the critical $65-per-barrel threshold, oil prices could accelerate their decline. Therefore, caution is advised.
This translated version adheres to native English expressions, maintaining clarity, logical flow, and full fidelity to the original content without any omissions or additions.
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